HR Outsourcing Models: Understanding the Differences Between Full-Service, Co-Sourcing, and BPO

As businesses grow and expand, they often need help to manage their increasing HR needs. That’s where HR outsourcing comes in. HR outsourcing involves partnering with an external service provider, such as an outsourced payroll company, to manage one or more HR functions, allowing businesses to focus on their core operations and free up resources.

However, with outsourcing services having many variations, it can take time to determine the best fit for your business needs. This article will discuss three standard HR outsourcing models: full-service, co-sourcing, and BPO (business process outsourcing), and explore their differences.

Full-Service HR Outsourcing Model

As the name suggests, the full-service HR outsourcing model involves outsourcing all HR functions to an external provider. The provider typically takes on all human capital management responsibilities, including recruitment, payroll processing services, benefits administration, compliance, and employee relations.

This model is ideal for businesses looking for a comprehensive HR solution without managing any HR functions in-house. Instead, the provider manages HR functions, allowing businesses to focus on other core business operations.

Co-Sourcing HR Outsourcing Model

Co-sourcing involves a collaborative approach where the client partners with an external service provider to share responsibilities for completing a project or delivering a service. This approach requires a closer working relationship between the client and the service provider, with the service provider acting more than an extension of the client’s team.

The client retains some control over the process and may contribute their resources to the project. Co-sourcing is often used for specialized or complex projects that require a high level of expertise, where the client may need more in-house capabilities.

This model is excellent for businesses that want to retain control over certain HR functions while outsourcing others. Co-sourcing gives businesses more control over their in-house HR functions. Co-outsourcing can facilitate seasonal or temporary arrangements where expert knowledge and intervention are necessary for a timely HR task or project.

BPO HR Outsourcing Model

BPO HR outsourcing involves outsourcing a specific HR process or function to an external provider to maintain it on behalf of the company. For example, businesses may outsource payroll processing, benefits administration, or compliance management.

BPO sourcing involves outsourcing an entire business process or set of processes to an external service provider. The service provider is responsible for managing and completing the entire process from start to finish every month. The client has less control over the process and is not involved in the day-to-day operations.

BPO sourcing is often used for more routine, standardized processes like payroll processing or customer service. This option is preferred when a company may need more expertise or resources to manage the process in-house.

This model is perfect for businesses that like to outsource a specific HR function while having control over other crucial or sensitive tasks.

Which HR Outsourcing Model is Right for Your Business?

Choosing the appropriate HR outsourcing model for your business depends on your specific needs, objectives, and requirements. Full-service outsourcing offers a complete HR solution but might not be more suitable for businesses that wish to maintain control over certain HR functions.

Co-sourcing enables businesses to outsource specific functions during seasonal projects where expert or professional intervention is necessary, whereas BPO permits businesses to outsource selected HR functions or processes while having full control over other tasks, so they don’t feel completely disconnected from their HR management system.

Before choosing an HR outsourcing model, assessing your business’s HR needs and determining which functions you want to outsource is essential. Then evaluate each outsourcing model’s pros and cons to determine which model best aligns with your business objectives and budget.


In conclusion, HR outsourcing is an excellent way for businesses to manage their HR needs effectively. It provides a great opportunity for businesses to focus on their core operations by partnering with an external provider to take care of some, if not all, HR functions or processes. Full-service, co-sourcing, and BPO are three standard HR outsourcing models. Understanding the differences between these models can help businesses make informed decisions and choose the most suitable HR outsourcing model that aligns with their respective HR objectives.